Doubling of Real Estate Investment Trusts in Britain Signals Industry Shift

The number of real estate investment trusts (REITs) in Britain has seen a significant surge over the past five years, largely due to changes in regulations that have reduced financial and administrative burdens. Data released under a freedom of information request revealed that there were 80 REITs in the 2019-20 tax year, which has now risen to 163 by July, according to HM Revenue & Customs. The increase is attributed to the relaxing of registration rules and tax advantages offered by REITs, which are exempt from corporation tax on rental income.

Key Takeaways:

• The number of REITs in Britain has doubled from 80 in the 2019-20 tax year to 163 by July 2024, as per HM Revenue & Customs data.
• The registration rules for REITs have been relaxed, eliminating the need for listing on a stock market, resulting in reduced financial and administrative burdens.
• Changes to registration rules have also expanded overseas investment opportunities, with more companies now eligible to be considered a REIT equivalent.
• Tax advantages offered by REITs, such as exemption from corporation tax on rental income, have contributed to their growing popularity.
• Existing commercial property investments are being converted into REIT structures, allowing investors to benefit from tax advantages.
• The industry expects a significant influx of new money into REITs, as well as a rise in existing commercial property investments converting to REIT structures.

Statistics:

• 80 REITs existed in the 2019-20 tax year (HMRC data).
• 163 REITs exist as of July 2024 (HMRC data).
• 45 new REITs were registered in the tax year ending April 2024, a 61% rise from the previous year's 28 (Lubbock Fine data).
• REIT guidelines have been relaxed to accommodate overseas investments, allowing for more companies to invest in the sector.

Sources:

• HM Revenue & Customs
• Lubbock Fine